Some 15 billion devices are connected to the Internet today. That figure is expected to be 50 billion in just five short years. Since many of us take the Internet and rapid technological development for granted these days, that increase might not grab your attention right away. But it should. We have entered a unique period in the life of the Internet – the Internet of Things (IoT) – that is going to transform our lives. And it’s going to revolutionize the logistics world.
Let’s step back for a minute. What is IoT exactly? Put simply, it is the network of physical objects. But what used to be a network composed entirely of computers increasingly includes “things” that are not computers in the classic sense. In fact, these objects serve a multiplicity of other purposes. In your home these might be lighting, appliances, air conditioning and entertainment devices. In logistics we’re talking about pallets, trucks, and even street lights (the list is endless). All of these objects have potential to deliver vast amounts of information – “dark assets” – that we can “light up” and use for convenience, potential new insights and business value.
A connected pallet, for example, can tell its owner the whereabouts and condition of their shipment. A connected truck can intelligently predict its own maintenance needs. A connected street light can sense the presence of cars and send environmental intelligence to drivers.
It’s only the beginning
We are only at the beginning of the IoT revolution. So far, less than one percent of the roughly 1.5 trillion items on earth that could benefit from an IP address are currently connected. The average consumer in a developed nation is surrounded by dozens of connectable items. These include computers, consumer electronics, communication devices, home appliances, clothing and wearable devices, vehicles and much more. By the time we hit the 50 billion mark in 2020, we think computers (including PCs, tablets, and smartphones) will represent just 17 percent of all Internet connections. The rest will be the result of IoT.
“The Internet of Things will revolutionize decision making – we know that,” says Edzard Overbeek, Senior Vice President, Cisco Services. “By connecting the previously un- connected, we create incredible potential for businesses to improve the speed and accuracy of decision making through the analysis and application of digital information. It enables dramatically faster cycle times, highly dynamic processes, adaptive customer experiences and, through the ecosystem of people and technology, the potential for breakthrough performance gains.”
From parcels to people
IoT promises far-reaching payoffs for logistics operators and their business and end customers. These benefits extend across the entire logistics value chain, including warehousing operations, freight transportation, and last-mile delivery. And they impact areas such as operational efficiency, safety and security, customer experience, and new business models. IoT allows us to begin to tackle difficult operational and business questions in exciting new ways, such as:
- monitor the status of assets, parcels, and people in real time throughout the value chain,
- measure how these assets are performing, and effect change in what they are currently doing (and what they will do next),
- automate business processes to eliminate manual interventions, improve quality and predictability, and lower costs.
- optimize how people, systems, and assets work together, and coordinate their activities.
- and ultimately, apply analytics to the entire value chain to identify wider improvement opportunities and best practices.
In essence, IoT in the world of logistics will be about “sensing and sense making.” The “sensing” part involves monitoring different assets within a supply chain through different technologies and mediums; “sense making” is concerned with handling the vast amounts of data sets that are generated as a result and then turning it into insights that drive new solutions.
It’s going to be a game changer, and a valuable one at that. Cisco estimates that IoT will deliver a $1.9 trillion boost to supply chain and logistics operations.
The time is now
But is this the right time to leverage IoT in logistics? We think so. The conditions are ripe for IoT to take off in the industry. There is a clear technology push through the rise of mobile computing, consumerization of IT, 5G networks and big data analytics, as well as a pull from customers who are increasingly demanding IoT-based solutions. Combined, these factors are enabling logistics providers to adopt IoT at an accelerating rate.
If you’d like to begin to understand the implication of IoT in logistics, read the latest DHL Trend-Report Internet of Things in Logistics . It explores a few of the many innovations presented by IoT and their application to the logistics industry.
I believe IoT has the potential to truly transform business practices across the entire value chain, and particularly the customer experience. It is clear that we are only at the beginning of what will certainly be an exciting journey for logistics innovation – a journey to connect the unconnected.